Best of the Week
Most Popular
1.Stocks Bear Market Apocalypse Imminent Crash Gets Nuked Again - Nadeem_Walayat
2.Gold And Silver – A Reality Check - Michael_Noonan
3.The Killer Ape, Human Evolution, Artificial Intelligence and Extinction End Game - Nadeem_Walayat
4.Stock Market S&P 500 Volatility-Based Price Probability Range - Richard_Shaw
5.A Stocks Bear Market Is Now More Likely Than Not - Richard_Shaw
6.Money Supply and the Fed’s Serious Inflation Risks - Zeal_LLC
7.More Selling for Stock Market, Gold? - Brad_Gudgeon
8.Gold, Silver Precious Metals: a Critical Week Ahead - Rambus_Chartology
9.Gold Price Change in Character - Gary_Savage
10.Advice for Biotech Investors: 'Hold Your Powder' 'til Winter - TLSReport
Last 5 days
The Real Reason for the Refugee Crisis You Won’t Hear About in the Media - 8th Oct 15
US Stocks: The [Trend]Line Between Bull and Bear Market - 8th Oct 15
Bundesbank “Reassures” Re. Gold Bullion Reserves as Deutsche Bank Shocks With €6 Billion Loss Warning - 8th Oct 15
How Our Aversion To Change Leads Us Into Danger - 8th Oct 15
Moving Stem Cell Research Forward: Bernie Siegel of the Genetics Policy Institute - 8th Oct 15
Stock Market VERY IMPORTANT Turn Date - 7th Oct 15
The 5th Convergence…An Economic & Financial Superstorm That Will Devastate America - 7th Oct 15
Summers Grades Janet Yellen's Fed Performance 'Incomplete' - 7th Oct 15
Gold Versus Central Banks Paper Ponzi - 7th Oct 15
QE3 is Over Get Ready for QE4 - 7th Oct 15
How to Profit from Government Mandates in Biofuels - 7th Oct 15
A Key Oil Price Trend That Everyone Is Missing - 6th Oct 15
Stock Market Turn Appears to Have Been Made - 6th Oct 15
Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective - 6th Oct 15
Peter Schiff Predicts Gold Price Breakout - Video - 6th Oct 15
Theresa May Declares War on Immigration - Conference Speech Full Transcript - 6th Oct 15
Is Russia Plotting To Bring Down OPEC? - 6th Oct 15
Target Date Funds As Aid In Retirement Investment Portfolio Design - 6th Oct 15
Stocks Bear Market Apocalypse Imminent Crash Gets Nuked Again - 6th Oct 15
Redesigning Internet and Facebook to Explore Their Full Potentialities... - 5th Oct 15
Nightshades Curb Your Enthusiasm - 5th Oct 15
U.S. Recession Watch, High-Yield – Rising Defaults - 5th Oct 15
The Social Challenge to Find Humanity in Capitalism - 5th Oct 15
Fed Interest Rate Hike: "I don't care. It doesn't really make much of a difference" - 5th Oct 15
Gold Rose 2.2%, Silver Surged 5.4% After Poor Jobs Number On Friday - 5th Oct 15
Gold, Silver Precious Metals: a Critical Week Ahead - 5th Oct 15
Stock Market Correction Still in Force - 5th Oct 15
Gold Price Change in Character - 5th Oct 15
Putin’s Blitz Leaves Washington Rankled and Confused - 4th Oct 15
More Selling for Stock Market, Gold? - 4th Oct 15
Gold And Silver – A Reality Check - 3rd Oct 15
Stock Market Primary IV Still, or Primary V Underway? - 3rd Oct 15
The Oil Industry’s Day of Reckoning - 3rd Oct 15
U.S. Interest Rate Hikes Keep On Slippin' Into the Future; Treasury Yields Sink Again - 3rd Oct 15
China's Stock Market Crashing; Time for Panic or Restraint - 3rd Oct 15
SPX Stocks Bulls Struggle to Regain the Upper hand... - 2nd Oct 15
The Two Faces of Stock Market Volatility - 2nd Oct 15
Money Supply and the Fed’s Serious Inflation Risks - 2nd Oct 15
Stock Market How Bad Can This Get, And How Fast? - 2nd Oct 15
A Worrying Set Of Recession Signals - 2nd Oct 15
Negative Jobs Report Sents SPX, TNX Lower - 2nd Oct 15
Don't be Fooled by the Recent Equity market Rallies. Its a Bear Market, Stupid! - 2nd Oct 15
US Bond Market - How to Fix This - 2nd Oct 15
Survival Secrets from Colorado Resource Investing Front Lines - 2nd Oct 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Central Bank Gold Sales Coming to an End?

Commodities / Gold & Silver Oct 03, 2008 - 04:33 PM GMT

By: Julian_DW_Phillips

Commodities Best Financial Markets Analysis ArticleIn the week ending 26th September 2008, the final week of the fourth year of the Central Bank Gold Agreement, two Eurosystem central banks sold less than 1 tonne of gold to complete the fourth year's sales. This makes a total for the year at around 345.5 tonnes of gold sold by the signatories.

The three previous years totals were as follows; year one at 437.2 tonnes, year two at 333.2 tonnes, and year three at 325.8 tonnes. So what will the final year of the Agreement bring? The 'ceiling' placed on gold sales for each year of the Agreement was 500 tonnes, a level never intended to be a target figure of sales, but rather act simply as a limit. This limit was never met, nor will it ever be.

Germany and Switzerland

Last week, two of the signatories have made announcements on future sales.

  1. Firstly, the Swiss National Bank announced in June 2007 that it had concluded the sale of 250 tonnes of gold, and said it had no plans for any further gold sales . It also said its total gold holdings were now at 1,040 tonnes, adding that it planned for no further reduction. In addition, the Swiss National Bank said it would sell 250 tonnes of gold by September 2009, as it decided that due to the rise in the gold price, its gold reserves were too high. It took up the option to sell gold from one of the signatories that relinquished this option.

  2. Secondly, the Bundesbank said it would sell no gold apart from 6.5 tonnes to the German finance ministry, as previously agreed upon. "The remaining sales quota will be offered in its entirety to other central banks taking part in the gold agreement," said the Bundesbank. Under the terms of a five-year deal between 15 European central banks, the Bundesbank was given an option to sell 120 tonnes of gold a year but has consistently offered its quota to other institutions and sold only enough bullion to mint coins [around 5 tonnes a year]. The Bundesbank holds 3,400 tonnes of gold.

These two statements confirm that two of Europe's largest holders of gold will not be selling any significant quantities of gold in the next year. France has been a seller of gold, but we believe, not a satisfied one. There are clear signs of this as the weekly sales of gold in the last few months have been so low that France will not reach the quantity it intended to sell. It still has around 133 tonnes of gold left out of the 600 tonnes it announced it would sell at the commencement of the Agreement. It appears that they made a large sale of between 25 and 30 tonnes a few weeks ago, but the drop to current levels was at a level that would have completed Switzerland's sales only . So, the question hangs in the air, have they stopped selling? With Sarkozy now President and clearly underwhelmed by the financial disasters in the States and now Europe, he is likely to not want to see France's 'crown jewels' sold off for more U.S. dollars.

European Central Bank Sales?

The E.C.B. announced at the beginning of the Agreement that they would only sell 235 tonnes, which they have already completed. However, these sales have normally gone through early in the year of the Agreement, starting on the 27th September of each year agreement year. Once they have sold, the E.C.B. confirmed in the media what they have sold and whether they will sell more or not. There is nothing to prevent them from repeating this again this year in the absence of Germany and increasing their sales above the announced 235 tonnes.

Remaining Sellers?

This leaves only three Central Banks that have been active sellers in the final year of the Agreement. All that remains of the sales targets they announced at the commencement of the Agreement are [around]:

1) France 133.5 tonnes
2) Sweden 15.7 tonnes
3) Netherlands 9.0 tonnes
TOTAL 158.2 tonnes

This is less than half the level of sales we have seen in the fourth year of the agreement. If France has stopped selling, then only 24.7 tonnes of sales remain from the signatory Central Banks over the next 12 months.

If this is the case, then it is not enough to have an affect on the gold price at all, unless the sales by France are conducted in large amounts and are dropped onto the market during opportune times [when the gold price is running up?].

Volumes bought by gold Exchange Traded Funds

To get a better market perspective, look at the amounts of gold bought by shareholders through the gold Exchange Trade Funds over the last three weeks. These amounts reached 145 tonnes, with 32 tonnes bought overnight in one amount twice in that period. We do expect this demand to continue in the face of a decaying global financial system, irrespective of the $700 billion Paulson's Package.

Available to Subscribers only – subscribe through

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2008 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2015 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History